How to accelerate your cashflow like a pro: Expert advice on agency management of accounts receivable
Where’s the cash? The answer might be hiding in plain sight
Sponsored by MP Cloud Technologies
By Robert Avsec for EMS1 BrandFocus
The business of providing EMS and ambulance transportation is undergoing tremendous changes ranging from community paramedicine programs to how Medicare pays EMS providers for emergency triage treat, and transport (ET3). The landscape is not just changing, it's undergoing an upheaval. And, in the post COVID-19 world, nobody knows yet what our new normal will be.
But one thing remains constant. Nothing is free and that includes providing EMS as well as non-emergency ambulance transportation.
According to Maggie Adams, president of EMS Financial Services, one of the biggest challenges that EMS agencies face is managing their accounts receivable (AR).
“The most common call that I get is ‘Our accounts receivable is growing, and we don't know why.’ ‘Or what's happening, where is our cash?” said Adams. “And the answer is there is no one answer to the question. It's probably stuck in a few different places or it's growing for a couple of reasons.”
Adams who started her company out of the Philadelphia area 30 years ago, is a recognized subject matter expert in her field and is a frequent author and speaker on the topic of EMS fiscal management. In her experience, the biggest area where EMS agencies can increase their cash flow is by promptly following up on their accounts . It seems like common-sense that you would want to follow-up where payment is due, but Adams said most agencies tend to spend most of their billing resources on getting invoices out the door.
“They are devoting very little time, energy, and effort to following up on their AR,” said Adams. “Yet many agencies have large amounts of uncollected revenue in those invoices that are 90 days or more past due.”
And her comments certainly resonate with Sherri Hardewig, a claims and billing specialist at MP Cloud Technologies. With more than 30 years of operating in the EMS financial reimbursements space, Hardewig has seen this mistake made too often.
“You should be getting paid for the services you provided within a 30 to 45-day window,” said Hardewig. “Anything past 45 days should be getting your immediate attention to find out why and get things moving. And that’s where it’s necessary to have the software to generate reports daily.”
To find the money, start with your AR reports
Many EMS agencies devote less time and fewer human resources to monitoring what goes on at the back end of the billing process where AR lives.
A good software system that makes those financial reports readily accessible to your AR staff (or person) is critical so they can see in real time what's going on. Once they can access that information, they can then apply resources to your agency’s outstanding AR and get the answers to those questions like, why is our AR growing? Where’s our money?
For starters, Adam and Hardewig agree that you should start by looking at who your biggest payers are and learn more about those accounts receivable.
According to Adams, one key question that you’ll need answers for is what percentages of your claims for each payer are being paid within 45 days?
“If you've got a large volume [of claims] over 90 days that are outstanding for a payer, focus on that payer because most claims should certainly be paid by the 45-day mark,” said Adams. “If you're hitting the 90-day mark there's a problem. My favorite “sweet spot” is actually 60 to 90 days because once claims gets older than 90 days it's much more difficult to get it paid.”
For most EMS agencies that bill for their services, their major payers are Medicare, Medicaid, commercial insurance, facilities, and self-pay customers.
GOVERNMENT PAYER PROGRAMS
“For the average ambulance company, their biggest payer is Medicare,” said Adams. “Next is Medicaid, and while they will not have as many dollars as Medicare, you’ll likely have a large volume of claims in Medicaid. Then come commercial insurance, self-pay and facilities (e.g., hospitals, skilled nursing care facilities). Medicare claims should pay very promptly, so if your people identify a problem with Medicare claims dropping, that must become a priority.
COMMERCIAL INSURANCE PAYERS
When it comes to commercial insurance payers, most states have laws that regulate how quickly commercial payers must pay and those laws tend to be in the range of 45 days or less. Use your claims data to identify your biggest payer (e.g., Blue Cross/Blue Shield, Humana, Kaiser) and then see how many of the claims your agency has sent out to that payer have been paid and in what time frame. If you find a problem, you know where to focus your resources to fix it.
An often-overlooked payer for EMS agencies—particularly those who do non-emergency transportation work—are the facilities where they pick up and return patients (e.g., doctor appointments, physical therapy, dialysis).
And those facilities are customers who provide your agency with a “double gift.” And one part of that double gift, according to Adams, is you get to bill Medicare for some of the trips you take out of a facility (e.g., nursing home, skilled care facility, rehab facility) and Medicare pays you in two weeks.
The other half is that your agency also gets to bill the same facility for some other trips that you take out of your facility that are not covered by Medicare (e.g., trip from a skilled nursing care facility to a doctor’s appointment to follow up on a hip fracture sustained two weeks ago).
In her experience, Adams has found that many EMS organizations and their providers do not know that when a patient is in a facility (e.g., skilled nursing care facility) the federal government gives the facility per diem money to manage the patient's care. Among other things, that money is supposed to cover certain types of transportation fees that are not covered by Medicare.
“If a patient is going to an emergency room for an acute problem, Medicare pays for that,” said Adams. “But if the patient is going to a doctor's appointment for a follow up to their hip fracture, or to rehab facility for their physical therapy for their hip fracture, that’s something the facility would pay [out of the patient’s per diem], and you could not bill Medicare.”
So, when it comes to their facility payers, EMS agencies must ensure that their field personnel have the training and education to differentiate between the two kinds of trips when arrive at the facility so that they gather the correct data set for the billing process. Good collection of the appropriate data on the front end makes it easier for your agencies staff that’s working on the back end of the billing process (Where AR lives, remember?).
Better yet, a technology solution like the Facility Portal in MP Technologies’ Advanced Dispatch software can give your facilities the ability to order their own transportation using a web browser. The Facility Portal can be configured with menu fields to ensure that every facility transport is billed to the correct payer from the beginning.
Knowing which claims you should pursue from the facility and which claims you should pursue with Medicare is another strategy in reducing your agency’s AR. And according to Adams, having good software that enables your people to pull the reports quickly and easily and manage that differentiation has benefits beyond reducing your outstanding AR.
“In doing so, you'd be protecting your revenue integrity, but you'd also be protecting your customer, your facility customer,” said Adams. “They also bear a compliance burden and a risk in this relationship [getting the transportation paid by the correct payer].”
According to Adams, many EMS agencies have a tendency not to push the relationship where they have to ask the facility for money (billing them for those trips not covered by Medicare) so that the facility will continue to give them the opportunity to take transports that are covered by Medicare.
“That's a financial risk and a compliance risk [for both parties] and yet people are so loathed to upset their facility relationships by asking for what the facility knows that it must pay for, that they fail to focus on facilities as a payer,” said Adams.
The last piece of this puzzle is that today many patients who do have private health insurance have higher deductibles that must be satisfied before their insurance kicks in.
Scenario: Your ambulance is the first component of the health care system to provide care and transportation for the patient. You promptly process the call and submit your invoice to the insurance company. If the patient's deductible has not been met, your claim will be denied and become part of your agency’s accounts receivable problem.
According to Stacey James, Sales Director at MP Cloud Technologies, there’s a software solution for EMS agencies. “With our Insurance Eligibility, a feature included within our AdvanceClaim software, users are able to see the status of the patient’s deductibles before they send the invoice to the insurance company.” This provides EMS agencies and their billing component the option of holding a patient’s invoice until the insurance company reports back to you that the patient's deductible has been met.
AdvanceClaim also has a feature, IntelligentEligibility, that enables your EMS agency to verify existing patient insurance coverage in real-time prior to transport by searching your region's top twenty payers, maximizing the probability that you’ll get paid when you submit the claim.
Here’s another idea for reducing your agency’s AR: Change the way you bill your self-pay patients. “We cannot keep doing things the way we have always done it [billing our private pay patients] but our comfort level in EMS is to send paper bills and statements out to patients,” said Adams. “I don't know about you, but I don't pay very much attention to paper mail anymore.”
And even e-mail seems to be tottering towards obsolescence. It’s currently estimated that globally more than 70 percent of people access the Internet using their smartphone or tablet. According to Adams, EMS agencies should be exploring how to use that mobile technology to help reduce their AR resulting from the self-pay patients.
Adams advocates EMS agencies moving toward a payment-by-text scenario. “The rest of healthcare is doing this, and the HIPAA privacy and security issues have been addressed,” said Adams. “The patient would get a text that directs them how to make their payment arrangements by text and they'd go from there. It's getting much better results than sending paper to patients.”
Reducing your EMS agency’s AR and having a good grasp on “where your money is” are two keys to improving the fiscal stability of your organization. And who’s not looking for greater fiscal stability?
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